Mexico’s automotive industry is entering a pivotal phase as global manufacturers rethink supply chains, tariffs reshape trade flows and the transition to electrification gathers pace. While uncertainty over evolving technologies and geo-politics continues to weigh on investment decisions, the country is leveraging its deep North American integration, competitive manufacturing base and expanding tyre sector to reinforce its position as a global auto parts powerhouse. Industry leaders now see fresh opportunities emerging not only from US and Canada but also from Latin America, Europe and India.

Mexico’s automotive parts industry is entering a new growth cycle powered by deep North American integration, expanding trade agreements, low-cost manufacturing and a rapidly evolving tyre sector that is adapting to electrification, hybrid vehicles and changing consumer preferences.

While global uncertainty over tariffs and the pace of electric vehicle (EV) adoption continues to cloud investment decisions, Executive President of Industria Nacional de Autopartes (INA) Francisco N. Gonzalez Díaz believes Mexico’s mature manufacturing ecosystem, skilled workforce and strategic location position it for another decade of expansion, one that could also strengthen ties with emerging automotive partners such as India.

“The country’s automotive supply chain has transformed dramatically since the North American Free Trade Agreement (NAFTA) came into force in 1994. Today, Mexico is the world’s fourth-largest producer of automotive parts and one of the most integrated manufacturing hubs in North America, exporting components and tyres primarily to United States and Canada while increasingly targeting Latin America and Europe,” said Diaz during an exclusive interaction with Tyre Trends.

He added, “The tyre sector is very important in Mexico. Over the past few years, we’ve seen major investments from companies such as Michelin and Pirelli and we also have Indian tyre manufacturers operating in Mexico. The industry is growing in both passenger and commercial vehicles while introducing technologies that reduce pollution and improve efficiency.”

Tyres produced in Mexico are exported not only across North America but also to Latin America and other international markets, making the sector an important contributor to the country’s automotive exports.

CHANGING LANDSCAPE

Although the Mexican tyre industry was once dominated by domestic manufacturers, the landscape has changed significantly. Companies such as Tornel were acquired by international firms as global players expanded their manufacturing footprint in the country.

Díaz noted that these acquisitions accelerated technology transfer and modernised production capabilities, effectively integrating local manufacturers into global supply chains.

Yet he believes the next generation of Mexican tyre companies may emerge through electrification.

According to him, two Mexican start-ups are currently developing tyres specifically for electric vehicles. Unlike conventional passenger-car tyres, EV tyres must withstand significantly greater vehicle weight while maintaining the dimensions and ride characteristics expected of passenger vehicles.

“These aren’t start-ups with four or five people,” he said. “They already employ close to 100 people and are developing tyres for one of the largest electric vehicle companies in United States.”

Unlike many markets where fully electric vehicles dominate industry discussions, Mexico’s transition is being led by hybrids.

With charging infrastructure still concentrated in homes, offices and selected commercial locations, plug-in hybrid vehicles are proving more practical than battery electric vehicles.

While EV sales are growing at roughly 30 percent annually, Díaz said they still represent a relatively small portion of the overall market.

Hybrid vehicles, however, are becoming the dominant technology, reshaping demand across the automotive supply chain including tyres.

CONSUMER PREFERENCES

Consumer preferences are also shifting in other ways. SUVs continue to gain market share across the Americas, while pickups remain popular throughout North America. Small passenger cars continue to sell primarily within Mexico but are growing more slowly than larger vehicles. At the same time, manufacturers are producing larger vehicles equipped with smaller engines as hybrid powertrains become more common.

Asian automakers are another defining trend. “Chinese, Japanese and Korean brands now account for the largest share of new vehicle sales in Mexico, reflecting changing consumer preferences and increasing regional competition,” said Diaz.

Climate is also influencing tyre demand. More intense rainy seasons are driving growing adoption of all-season tyres, which require more sophisticated compounds and engineering than conventional tyres.

“As weather patterns become more extreme, all-season tyres have become an increasingly important business for the tyre industry,” Díaz said.

EXPORTS LEAD

Mexico’s automotive success, however, remains closely tied to exports. Approximately 90 percent of the country’s automotive production is destined for United States and Canada, creating what Díaz describes as a single integrated North American manufacturing market rather than three independent national industries.

“Vehicle components frequently cross borders multiple times before final assembly. While tyres generally move only once or twice, other automotive components may cross the US-Mexico border as many as seven times during production,” he noted.

This integration is reinforced by United States-Mexico-Canada Agreement rules requiring 75 percent regional value content, encouraging manufacturers to source components within North America.

While Mexico’s dependence on exports often raises questions about vulnerability to geo-political tensions, Díaz argues the country’s manufacturing model resembles those of Germany and South Korea.

Instead of viewing exports as a weakness, he sees them as Mexico’s greatest competitive advantage.

MANUFACTURING APPEAL

The country’s manufacturing appeal extends well beyond geography. Mexico enjoys free trade agreements with markets throughout Latin America and is also a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), giving manufacturers tariff-free or preferential access to dozens of international markets.

The country also accounts for roughly 52 percent of Latin America’s advanced manufacturing capacity, making it the region’s undisputed industrial leader.

Equally important is the ecosystem surrounding automotive production. Mexico offers experienced engineers, skilled technicians, established suppliers, mature logistics networks and decades of manufacturing expertise.

“You don’t have to build an industry from scratch,” Díaz said. “The suppliers, knowledge, logistics and the customers are already here.”

The country’s position as the world’s largest exporter of trucks and a production hub for passenger vehicles including BMW models further strengthens domestic demand for both commercial and passenger vehicle tyres.

Unlike emerging manufacturing destinations that may offer inexpensive labour but lack industrial capabilities, Mexico already possesses the specialised workforce and supply chains necessary to support complex automotive production.

CERTAINTY IN UNCERTAINTY

Despite uncertainty surrounding global trade, investment enquiries continue. Some manufacturers have already secured land for expansion, while others remain cautious as they monitor evolving trade policies.

According to Díaz, around 10 to 12 Indian companies are currently exploring investments in Mexico to establish tier-II and tier-III automotive component operations serving North America.

The interest reflects Mexico’s continued attractiveness even after renewed tariff discussions under the Trump administration.

When United States introduced new tariffs shortly after President Donald Trump’s return to office, Mexico initially appeared vulnerable. However, automotive components that complied with USMCA rules quickly regained tariff-free access.

“The direct impact on Mexican auto parts has been minimal,” Díaz said.

Instead, tariff-related costs have largely been absorbed by vehicle manufacturers rather than component suppliers.

Indirect effects have emerged through higher prices for steel, aluminium and other raw materials, prompting manufacturers to reconsider sourcing strategies, particularly for North American-produced steel.

Even so, Díaz believes the overall trading framework continues to function effectively.

LOCAL ADVANTAGES

Mexico’s manufacturing competitiveness is reinforced by strong local sourcing. On average, around 85 percent of tyre materials and related inputs are sourced domestically, with only about 15 percent imported, although specialised products can require significantly higher import content.

Tyres themselves account for approximately 8–9 percent of Mexico’s automotive components industry by value. Efficient logistics further enhance competitiveness.

Rail remains the preferred mode of transport for most automotive exports because production schedules are planned months in advance. Trucks handle regional distribution, while shipping and air freight are used only when necessary.

Energy costs represent another important advantage. Abundant natural gas from neighbouring Texas has helped keep electricity prices among the lowest globally, while Mexico also possesses substantial solar and wind resources.

The remaining challenge lies in expanding transmission infrastructure so electricity generated in one region can be distributed more efficiently across the country.

Manufacturing costs, meanwhile, continue to rise, but so does productivity. Mexico is no longer the ultra-low-cost manufacturing destination it was in the 1970s. However, Díaz said wage growth is increasingly being matched by productivity gains.

Citing projections from the OECD and the Economic Commission for Latin America and the Caribbean (ECLAC), he expects productivity to continue improving over the next five years, allowing higher wages without significantly eroding industrial competitiveness.

HURDLES IN FRAY

The industry’s biggest challenge today is uncertainty rather than costs.

Rapid policy shifts surrounding electric vehicles, changes to the US Inflation Reduction Act, Europe’s evolving emissions regulations and emerging hydrogen technologies are forcing manufacturers to invest simultaneously in internal combustion engine and EV production.

Companies must finance parallel production lines despite demand remaining difficult to predict. “It’s a significant capital expenditure,” Díaz said. “But we know the future is coming, so we have to be ready.”

Mexico’s tyre recycling sector remains comparatively underdeveloped.

Less than 5 percent of end-of-life tyres are processed domestically with most used tyres exported to United States, where larger recycling infrastructure already exists. Domestic recycling operations remain small and largely artisanal.

On policy, Díaz said Mexico currently has no immediate plans comparable to India’s ethanol blending programme, although regulatory changes can be implemented quickly when necessary.

Trade policy, however, continues to encourage localisation. “Imported vehicles that fail to meet Mexican content requirements face tariffs, incentivising manufacturers including motorcycle producers from India to incorporate locally produced components,” said Diaz.

He noted that Mexican suppliers now provide roughly 90 percent of the components used in motorcycles assembled in the country, compared with only about 2 percent when localisation efforts first began.

OPTIMISTIC TURNS AHEAD

Looking ahead, INA expects Mexico to deepen its integration not only within North America but also across Latin America and Europe.

The association believes Mexico’s share of the Mercosur automotive components market could rise from roughly 2 percent today to as much as 10–15 percent over the next five years as manufacturers increasingly seek competitive production bases.

At the same time, European companies facing rising costs and geopolitical uncertainty are shifting portions of their manufacturing footprint to Mexico to serve markets on both sides of the Atlantic.

India will also play a growing role in that strategy.

Rather than simply importing or exporting products, Díaz envisions deeper industrial partnerships extending into third-country markets. “Our job is not to wait and see,” he said. “Our job is to strengthen the relationship.”

For INA, the long-term opportunity extends beyond bilateral trade.

As a member of the G7 association of the world’s seven largest automotive parts-producing countries, Mexico is positioning itself not merely as a manufacturing destination but as a strategic partner helping shape the future of the global automotive supply chain.

AMETEK recently completed its USD 5- billion all-cash acquisition of a portfolio of instrumentation businesses from Indicor.

The businesses, collectively known as Indicor Instrumentation, make equipment for industrial and scientific applications. Their products serve markets that overlap with AMETEK’s existing operations and generate recurring revenue from consumables, services and aftermarket support.

David A Zapico, AMETEK’s Chairman and Chief Executive, said: “We are excited to complete this highly strategic acquisition and to welcome the Indicor Instrumentation team to AMETEK. With its mission-critical solutions, deep technical expertise, and strong positions in attractive end markets, Indicor Instrumentation is an excellent fit with AMETEK. We also see meaningful opportunities to create value through integration into our proven operating model.”

Indicor Instrumentation is expected to contribute about USD 350 million to AMETEK’s sales in 2026 and to be modestly accretive to adjusted earnings for the year.

The acquired businesses will join AMETEK’s Electronic Instruments Group and Electromechanical Group, according to their products and market focus.

The Goodyear Tire & Rubber Company has elected Joe Hinrichs as chairman of its Board of Directors, effective 7 October 2026. He will also chair the board's Governance and Executive Committees. Hinrichs joined the board in 2023 and succeeds Laurette Koellner, who will retire at the 2027 annual meeting under Goodyear's Corporate Governance Guidelines.

Hinrichs most recently served as President and Chief Executive Officer of CSX Corporation. Before that, he held numerous leadership roles at Ford Motor Company, including President of the Global Automotive Business, Executive Vice President and President of Global Operations, Executive Vice President and President of the Americas, President of Asia Pacific and Africa, and Chairman and Chief Executive Officer of Ford China. He also led Ford Canada. Hinrichs holds a bachelor's degree in electrical engineering from the University of Dayton and an MBA from Harvard Business School.

Koellner previously held several leadership roles at The Boeing Company. She joined Goodyear's board in 2015, became independent Lead Director in 2019, and Non-Executive Chairman in 2024.

Hinrichs said, "I would like to recognise and thank Laurette for her leadership, dedication and unwavering commitment to Goodyear. On behalf of the Board, we are grateful for her many contributions throughout her more than a decade of service. I look forward to working alongside my fellow board members and the leadership team as we continue to innovate, strengthen our competitive position, create long-term value for our shareholders and build a stronger Goodyear."

CEAT’s Chennai and Halol plants are the only tyre facilities globally with two WEF Global Lighthouse Network inductions, and the company has also won the Deming Grand Prize for manufacturing excellence.

Yet 30 km from Mumbai, CEAT Specialty’s 49-acre Ambernath plant tells a different story: tyres too heavy for automation, built instead around nitrogen curing, induction presses and orders as small as one unit – a bet that sustainability will win markets in Europe and America.

The stakes: an INR 5 billion investment in all-steel radial technology, capacity expansion to 160 tonnes/day and a Camso manufacturing deal Tolani pegs at up to USD 1 billion – turning a manufacturing constraint into a competitive edge.

Amit Tolani, Chief Executive of CEAT Specialty, does not talk about tyres the way most executives talk about their products. He talks about them the way an engineer talks about a puzzle that keeps changing shape. “The way to look at it is that the manufacturing processes that we follow – how modern they are, how capable they are, how technically efficient – that’s what matters,” he says, sitting inside the plant that has become the nerve centre of CEAT’s off-highway tyre (OHT) business.

That plant – the Ambernath facility, a division of Mumbai-headquartered RPG Group’s CEAT Limited – is not a conventional tyre factory. It builds tyres that can weigh up to over 600 kilogrammes, tyres too large and too heavy for the automation that has transformed the passenger-car tyre business. And it is this constraint, as much as any strategic masterplan, that has shaped how CEAT Specialty has chosen to compete.

A PLANT THAT CANNOT SIMPLY COPY THE ROBOTS

Ask Tolani why Ambernath has not adopted the wall-to-wall robotic automation seen at CEAT’s Chennai or Halol facility, and the answer is refreshingly unglamorous: physics. “PCR tyres can be lifted by an ordinary human being, or a forklift, or robots,” he explains. “For these tyres, which are 600–700 kg, it’s very difficult to have a conveyor that can just lift them.” In the processes that do lend themselves to automation – mixing, calendering, curing – Ambernath’s equipment, he insists, is ‘as modern as the Chennai plant. More modern’. The plant intends to formalise that claim in the coming months by pursuing Industry 4.0 certification.

Where the physical limits of scale end, digital ones have taken over. A SCADA system tracks steam lines running beneath the plant floor. Where a leak once required a worker to walk the line, take manual temperature readings and diagnose the fault, artificial intelligence now flags the location almost instantly. “The point time taken to identify the problem is close to zero,” Tolani says. Every tyre carries a digital identity from raw material to finished good; a single scan reveals the batch, the machine, the operator and the timestamp behind it. AI is also being trained on the plant’s visual tyre inspection – traditionally a human, eyeball-driven task – using high-resolution cameras to catch defects, and on optimising mixing recipes and cycle times, the invisible chemistry that determines how a tyre performs in a paddy field or a quarry.

CURING WITHOUT STEAM

The most technically striking claim to emerge from Ambernath concerns curing – the energy-intensive process of vulcanising rubber under heat and pressure that has, for a century, meant steam. “This plant has already started using nitrogen curing on one of the lines,” Tolani says. Alongside it sit two proof-of-concept induction curing presses – a steam-free process, while the nitrogen conversion has come via LMT. “There are two presses that are already commissioned here,” he says. “We’ve already started working in that direction, where we want to take a lead in this space.”

The bulk of the plant’s newest investment, however, is going into something more conventional in principle but strategically significant in intent: all-steel radial off-the-road tyres. CEAT Specialty has committed INR 5 billion to this latest phase of expansion, representing a decisive shift in product architecture. Where a car’s tyres are universally radial, only 60–70 percent of truck tyres have made that transition, and agricultural and OTR applications lag further still – agriculture because usage is seasonal, OTR because a fabric-belted bias tyre still does much of the heavy lifting. All-steel radial construction changes that calculus by delivering higher load-carrying capacity and greater comfort, attributes increasingly demanded not only by Indian buyers but, crucially, by European and American customers. “It’s for demand from the European market, the US market – and the Indian market is also growing in such a handsome fashion that we want to cater to it,” Tolani says.

LEAN BY DESIGN, NOT BY SLOGAN

CEAT’s manufacturing philosophy is inseparable from its most prized accolade: in 2017, CEAT became the first tyre company outside Japan to win the Deming Prize, the world’s most prestigious award for total quality management; in 2023, it became the first tyre company anywhere to win the Deming Grand Prize, a distinction held by only 33 organisations globally as of 2025. Inside CEAT, this discipline is branded QBM – Quality Based Management – a homegrown fusion of Total Quality Management, the Toyota Production System and Total Productive Maintenance.

“We are a Deming Grand organisation. That means we follow the philosophy of lean manufacturing – not to use resources or have any wastage in the process,” Tolani says. That philosophy is embedded, quite literally, in the plant’s straight-flow layout, which runs from raw material storage through mixing, stock preparation, tyre building, curing and final finish in a single unbroken line. Even small batch sizes, he says, are produced without the wastage, excess labour or lost efficiency – what the plant’s internal vocabulary calls ‘Muri’ – that might otherwise creep in.

That same lean instinct underpins one of Ambernath’s more unusual competitive claims: a minimum order quantity of one. In an industry historically built around economies of scale, the plant will build a single speciality tyre to a customer’s specification without demanding batch aggregation – a capability the company says few OHT plants worldwide can match. Self-managed teams on the shop floor plan and execute changeovers themselves, allowing a highly automated, digitally traceable line to pivot rapidly to low-volume, customised orders. A related innovation, branded Unistage, builds and shapes an agricultural or OTR radial carcass into its final toroidal form on a single drum rather than the conventional two-stage process, reducing the handovers.

AN R&D CENTRE BUILT FOR SPEED, NOT SCALE

CEAT Specialty operates a dedicated in-house research and development facility at Ambernath, distinct from the group’s broader R&D infrastructure, and Tolani is candid about why. Tolani says, “This business is very, very different. There is no Pareto here – no 80/20 rule where a handful of product sizes serve the bulk of demand. Because farm and off-highway equipment come in such a long tail of sizes and configurations, and because the plant supplies numerous international OEMs directly, the time taken to develop, validate and commercialise a new tyre has to be compressed.”

“We needed a dedicated facility, closer to the manufacturing, so that we can quickly pilot, quickly turn around,” he adds. A new Compound Laboratory, opened in September 2025, now anchors materials science work spanning OTR, agricultural and industrial segments, while AI-assisted testing has trimmed, by Tolani’s estimate, roughly a third off the time from concept to market. The centre’s pipeline currently spans all-steel OTR tyres, a newly launched forestry range, very high flexion (VF) agricultural tyres and expanding work in earthmoving and material handling.

CAMSO ACQUIRED FOR BRAND, CHANNEL AND CATEGORY

CEAT Specialty’s move into Camso – a name Tolani values at up to USD 1 billion in brand potential across agricultural tracks, power sport tracks and material handling – may be its most consequential strategic bet. “It was a natural fit for us in terms of completing our portfolio,” he says. Ambernath, built in 2018 solely for agricultural radial tyres, gains through Camso’s new OEM ties (Massey Ferguson, John Deere) and construction-channel access across South America and Europe.

Under a three-year Michelin agreement, CEAT can currently manufacture and sell only compact construction tyres and tracks under Camso, taking over end-consumer sales in that segment – with other categories opening up once the term ends. The impact is already visible: standalone, CEAT Specialty’s off-highway mix is 85:15 agriculture to non-agriculture; with Camso’s, it shifts toward 50:50.

THE NUMBERS BEHIND THE AMBITION

Ambernath is running at 105 tonnes a day, at 92–95 percent utilisation – ahead of schedule. A further phase, due within 45 to 60 days, will lift capacity to 160 tonnes. Camso, still integrating, runs at roughly 50 percent.

Off-highway tyres make up close to 20 percent of CEAT’s speciality revenue, with the agriculture-to-non-agriculture split narrowing from 85:15 to near 50:50 once Camso is included. Domestically, Tolani credits GST reforms for a strong OEM market, led by Mahindra and TAFE, while mining stays flat – a segment Camso’s construction heritage should help lift as the new all-steel OTR line comes online.

When the World Economic Forum inducted CEAT’s Chennai facility into its Global Lighthouse Network in January 2025, it made the Indian tyre-maker the first tyre brand in the world to hold two such honours – Chennai following in the footsteps of the company’s Halol plant. Add to that CEAT’s Deming Grand Prize, awarded by the Union of Japanese Scientists and Engineers for sustained excellence in Total Quality Management, and the company finds itself in rarefied company: one of only a handful of manufacturers worldwide, and the only tyre brand to hold both distinctions.

Behind these accolades sits a quieter, harder story – one of culture change, shop-floor scepticism and years of disciplined, incremental investment in artificial intelligence, the Industrial Internet of Things and automation. In an interview with Tyre Trends, Jayasankar Kuruppal, Senior Vice President, Manufacturing at CEAT, spoke on what these recognitions actually mean on the factory floor, and where the company believes manufacturing is headed next.

AWARDS AS A BY-PRODUCT, NOT THE GOAL

CEAT’s Chennai plant has posted striking numbers since its digital transformation began: a 54 percent improvement in dispatch turnaround, a 25 percent uplift in labour productivity, an 18 percent reduction in cycle times, a 31 percent improvement in operating cost and a 47 percent cut in Scope 1 and 2 emissions. Yet Kuruppal is quick to reframe the narrative around these achievements.

“The awards are lagging indicators, not the goal. What actually matters is what they force us to build: a common language for problem-solving across every plant, real-time visibility into quality and efficiencies and a workforce that trusts data over gut-feel,” Kuruppal said.

“That discipline shows up directly in the numbers – tighter process capability, better efficiencies and faster changeovers leading to shorter lead times. There is a commercial dividend too: global OEMs increasingly audit manufacturing maturity, and being part of the WEF Global Lighthouse Network gives us instant credibility in those conversations,” he added.

WHAT’S REALLY DRIVING THE INVESTMENT

CEAT has been pouring capital into AI, IIoT and automation across its plants. Is this cost pressure, premiumisation or a simple need to stay globally competitive? Kuruppal’s answer suggests it is all three, each playing a distinct role.

Kuruppal explained, “Quality, cost and efficiency is what gets the funding approved. Premiumisation is what’s shaping which lines we automate or upgrade first – you cannot hold the tolerances a premium radial demands with manual, operator-dependent processes.” According to him, global competitiveness, meanwhile, sets the ambition. “We’re not benchmarking ourselves against the best tyre plant in India anymore – we’re benchmarking against the best factories in any industry,” he added.

Asked to rank the three forces, he summarised neatly: competitiveness sets the ambition, premiumisation sets the sequencing and cost discipline keeps the whole effort honest.

REPLICATING HALOL AT CHENNAI: CULTURE OVER CODE

Chennai’s transformation built directly on lessons learned at Halol, the world’s first tyre facility inducted into the Lighthouse Network. And when asked what proved hardest to replicate, the technology, the culture or getting the underlying processes right, Kuruppal said, “Technology was actually the easiest part to copy. A use case that works at Halol can be re-deployed at Chennai in weeks.”

But the real difficulty, as per Kuruppal, was culture, people and change management. At Halol, habits such as daily data reviews, operator ownership of quality metrics and a managerial focus on coaching rather than firefighting were built steadily over several years. Chennai, by contrast, has had to replicate that trajectory on a compressed timeline, with a workforce encountering these practices for the first time.

“We had to resist the temptation to just parachute in dashboards and call it digital. We spent real time getting the underlying process standardisation right first, because AI on top of an unstable process just gives you a faster route to the wrong answer,” Kuruppal said.

Jayasankar Kuruppal, Senior Vice President, Manufacturing, CEAT

WHERE THE RETURNS SHOW UP – AND WHERE THEY HAVEN’T YET

The productivity and dispatch gains at Chennai, he explained, hit the balance sheet in different ways. The productivity improvement lowers conversion cost per tyre and improves absorption of fixed costs as volumes grow. The dispatch improvement is more of a customer-experience story: less finished-goods inventory sitting idle, and OEMs and dealers receiving faster, more predictable delivery windows – ‘which matters a lot when you’re chasing premium and export business’.

Not every initiative has paid off yet, however. Kuruppal was candid about the areas still short of return, singling out ‘some of the more exploratory AI use cases – like computer-vision pilots – which need more data cycles before the accuracy justifies scaling them further’.

QUALITY, MAINTENANCE, OUTPUT: AI TOUCHES ALL THREE

Rather than picking a single area where artificial intelligence delivers most value, Kuruppal argued that its power lies in the way it now touches quality, maintenance and output simultaneously – and that these reinforce one another. “Better quality data feeds better predictive-maintenance models, which reduces unplanned downtime, which directly lifts output,” he said. The most immediate impact shows up in more consistent product quality, higher yields and earlier detection of equipment issues. He pushed back, though, on the idea that AI at CEAT is a single flagship project: “On our floor, it’s dozens of narrow, specific use cases, each solving one operator’s or one supervisor’s actual problem.”

JUSTIFYING THE SPEND IN A MARGIN-TIGHT BUSINESS

Tyre manufacturing is not a business with room for indulgent technology spending, and Kuruppal was clear that CEAT does not fund innovation for its own sake. “Every use case has to show a clear line to quality, efficiency, cost or capacity enhancement before it gets budget,” he said. The company deliberately starts small – piloting on a single line, proving value with real production data, and scaling only what works – a discipline that means ‘the savings from scaled use cases fund the next round of pilots’. He offered a broader rationale too: in a commodity-adjacent business where raw material costs sit largely outside a manufacturer’s control, manufacturing capability itself becomes the differentiator. “If we can’t always control input costs, we can control how efficiently and consistently we convert them into tyres,” he added.

CHENNAI PLANT WIDENS ITS PREMIUM PUSH

CEAT on Oct. 1 announced an expansion of manufacturing capabilities at its Chennai plant across passenger car and SUV, commercial vehicle and two-wheeler tyres. The company said the move targets premium customers in India, Europe and North America.

What’s new

Cars and SUVs: The plant now makes the SportDrive SUV ZR22. CEAT said this makes it the first Indian tyre company to manufacture 22-inch tyres in India. It also makes the 4SeasonDrive+ all-season tyre and the CrossDrive RT rugged-terrain tyre, built for the U.S. market.

Trucks and buses: The plant can now produce seven advanced truck and bus radial sizes, including wide-base tyres that can replace dual-tyre setups, and low-profile sizes. CEAT is also scaling light truck steel radials in 15-, 16- and 17.5-inch sizes.

Two-wheelers: The SportRad Racing Slick range targets track use, and SportRad ST is a sport-touring range for motorcycles above 650cc.

“This investment strengthens our ability to compete in premium segments with products developed and manufactured in India,” CEAT managing director and CEO Arnab Banerjee said.

The 163-acre plant in Sriperumbudur, Kanchipuram, runs on connected machinery and real-time analytics. It also has a 9 MW rooftop solar installation and operates as a zero-liquid-discharge facility.

FROM PILOT TO SCALE: AN OPERATING-MODEL PROBLEM

With a large share of CEAT’s lines now running as ‘smart lines’, when asked what changes when a company moves from isolated pilots to scaling technology across multiple plants, the CEAT executive explained, “The problem changes completely. A pilot is a technology and data-science problem – get the model working, prove the use case. Scaling is an operating-model problem – standard work, training, change management, IT infrastructure that can handle load across sites and governance so every plant isn’t reinventing its own version of the same solution.”

CEAT has built what he calls a central playbook – reusable architecture, common data standards and the ability to roll a proven use case out to a new plant in weeks rather than months. “Just as importantly, ownership shifts: at pilot stage, a project team owns the initiative; at scale, it must become the plant’s own way of working, run by operations rather than a digital team sitting alongside it,” he added.

BRINGING 80 PERCENT OF THE WORKFORCE ALONG

CEAT reports that more than 80 percent of its workforce is now digitally enabled – a transformation Kuruppal admits did not come without resistance. “Yes, and I’d be understating it if I said otherwise,” he said. Crucially, he insists the resistance was never really about technology itself but about ease of operation. What worked, he explained, was making tools visibly useful to the person using them first – an operator seeing a dashboard that helps them hit their own target before it ever becomes a management reporting tool. CEAT invested heavily in shop-floor-specific training rather than generic digital-literacy courses and made a point of promoting from within, demonstrating that digital skills opened up better roles rather than closing off old ones. The company has also created new shop-floor roles beyond data scientists and engineers – ‘Business Translators’ and ‘Champions’ who act as torchbearers driving scaled implementation and wider blue-collar involvement.

CONSISTENCY, NOT JUST DEFECT COUNTS

Asked whether tighter process control has genuinely reduced defects, Kuruppal reframed the question around consistency. “Tighter process control means less batch-to-batch variation, which matters enormously in tyre manufacturing because so much of performance and durability comes down to material consistency through mixing, extrusion and curing,” he said. Real-time monitoring now catches drift early, rather than at final inspection – both a quality win and a material-efficiency win, in the form of less scrap and rework. The habit that has changed most, he said, is that quality data now drives daily decisions on the shop floor, rather than featuring only in a monthly review.

MANUFACTURING FOR A PREMIUM, ELECTRIC FUTURE

CEAT’s push into premium tyres calls for a step-change in manufacturing discipline. “Premium tyres are far less forgiving of variation, so the shift starts with tightening process capability across every stage – not just final inspection. That means more precise equipment, better process capability and closed-loop control,” said Kuruppal. In this context, flexibility takes on a different meaning: a wider SKU mix, smaller batch sizes and faster changeovers are pushing the company towards more modular manufacturing, alongside a workforce increasingly weighted towards process engineering expertise.

Electric vehicles introduce an additional layer of complexity. EV tyres must carry greater weight, handle instant torque and operate more quietly, tightening specifications around structural strength, noise and rolling resistance beyond those of conventional tyres. On the shop floor, that translates into new compound formulations requiring precise mixing, reinforced construction demanding tighter control of building machines and significantly lower tolerance for micro-variation.

CEAT’s existing leadership in the e-two-wheeler tyre segment, Kuruppal noted, is already feeding lessons – particularly on noise and efficiency – into how the company prepares lines for growing e-four-wheeler volumes in India.

SUSTAINABILITY AND RESILIENCE, BUILT IN

Sustainability, once a separate reporting exercise, is now ‘a line item in almost every manufacturing decision’, with energy and emissions sitting alongside cost and quality when evaluating new processes or equipment – Chennai’s 47 percent emissions reduction being the clearest proof point. Resilience, too, has become as much a data problem as a sourcing one. “Real-time visibility into inventory, machine health and production schedules means we can see a disruption coming and reschedule around it rather than reacting after a line has already stopped,” Kuruppal said, pointing also to greater flexibility in shifting product mix between lines and earlier warning signals from digitised supplier and logistics data.

SPEED AS A COMPETITIVE WEAPON

Manufacturing speed and flexibility, Kuruppal argues, have become one of CEAT’s most important competitive dimensions, as OEMs compress their own development cycles and expect tyre partners to match their pace – faster prototyping, faster line trials, faster ramp-up to volume. Chennai’s faster dispatch turnaround is part of the same story. “It’s not just about making tyres faster; it’s about the whole chain from order to delivery being more predictable and quicker,” he said.

GROUND STILL TO COVER

For all its Lighthouse credentials, Kuruppal was refreshingly honest about the distance still to travel. “Being part of that network is genuinely humbling. You see factories in electronics and consumer goods running end-to-end AI-driven planning and quality systems at a level of maturity we’re still building towards – particularly in advanced analytics for demand-and-production planning and in scaling generative-AI use cases beyond pilots,” he said. CEAT’s strength, he believes, lies in shop-floor execution and quality; the next frontier is connecting that data seamlessly across the full value chain, from raw-material sourcing to the end customer.

MANUFACTURING AS A GROWTH DRIVER

Perhaps the most striking shift Kuruppal describes is a change in how manufacturing itself is perceived within the business. “Traditionally, manufacturing was viewed in this industry as a cost centre that executes what sales and product teams decide,” he said.

“Today, our manufacturing capability is directly opening up premium and export opportunities, because global customers evaluate factory maturity as part of their sourcing decision. It works in the other direction too, shaping which premium and EV products the company can confidently commit to launching. Manufacturing has moved from being an execution function to being a genuine input into growth strategy,” he added.

WHAT COMES NEXT

Looking ahead, Kuruppal frames the next horizon as connecting what CEAT has built plant-by-plant into a single, integrated digital thread – spanning raw-material and demand planning, production and distribution – so decisions are optimised end-to-end rather than site-by-site. Generative AI, he said, is increasingly being explored for process and equipment troubleshooting and knowledge capture, making the expertise of CEAT’s best engineers accessible across every plant. Sustainability, meanwhile, will be designed into new lines from the outset rather than retrofitted. “The common thread is moving from isolated smart use cases to a genuinely integrated smart manufacturing system,” he explained.

THE ONE NUMBER THAT MATTERS

Answering the question on if he could track just one metric across every CEAT plant, what would it be, he admitted, “If I’m honest, no single number tells the whole story, but if forced to pick one, it would be Overall Equipment Effectiveness – OEE.”

“As a composite of availability, performance and quality, a healthy and rising OEE generally signals that machines are running, running at the right speed and producing good tyres – which is really the definition of a plant working as it should,” he said. It has its limits – OEE alone won’t reveal a lapse in safety culture or the pace of digital adoption – which is why, in the end, Kuruppal names two figures he watches above all: OEE and safety indicators.